Brexit: Why law students are less likely to be offered training contracts

How the referendum result will impact the legal market, and what law firms can do about it

Analysts are predicting that the United Kingdom is likely to fall in the Economic League Table as a consequence of Brexit. The uncertainties that the decision has created will lead, and have already led, to an anxious corporate world. But what will the effect of Brexit on the corporate and legal markets be?

The fall in the Economy League Table is predicted to demote the UK as a leading global economy in place of France by next year. Though recent stats on GDP have shown no sudden fall in the UK economy since Brexit, it is speculated this will change over the next economic year.

So, how is this affecting corporations?

Well with the uncertainties surrounding the state of the economy and the threat of a possible recession, companies are less enthusiastic to invest in their strategic plans. A reduction in company spending leads to a reduction in growth and significant inflation. This in itself will have a significant effect on the UK’s economy. The value of the pound since the UK’s decision to leave has been catastrophic, with its value reaching lows last year that were not expected. Businesses are now having to rely on the change in currency rates to predict their long term international and national trade values.

Trade is another area expected to affect corporations as a consequence of Brexit. The EU has a free trade system and international dealings with the likes of America.
By leaving the EU, the UK will be subject to possible import and export taxes on their goods. This does not gel well with the possibility the UK will be required to determine new trade deals outside the ones within the EU. These deals are not small things and if they are not complete come the point the UK officially disembarks from the realms of the EU then the economy and trading industry could come under heavy stress.

The UK economy is not the only Brexit issue; it has been speculated the leave vote has sparked a chain of events which has left the European community unsure of its future.

France, for example, is a likely contender to take the next step to leave the EU, which will in turn lead to an uncertain EU. It will be vulnerable to collapse due to its financial instability as global superpowers begin to leave.

Worrying signs of slowing economies worldwide — like China, Brazil and Russia — have led to corporations becoming nervy about their decisions to expand and grow. The fear of a worldwide recession is something which is very unlikely to happen. However, the state of the world’s economy and the power being held within less western states is leading to a shift in the normalities of the corporate world.

How does this affect the legal market?

Well, the legal market superpowers are based within corporate law. The clients of corporate lawyers are businesses. If these businesses are affected by Brexit, you can bet that law firms will be as well.

The legal market is likely to be impacted dramatically because of work available to firms. If clients are not spending money and have no deals that they want closing, then this leads to a reduction in the workload of corporate lawyers. This then influences law graduates; with a reduction in the corporate market requirements, law students are less likely to be offered training contracts.

Another area in which the legal market will be affected is free movement. It is predicted many corporate firms use the UK to litigate international trade dealings. Whether lawyers will still be able to represent clients on international dealings or address in a European court is still unknown. With the possibility of a reduced access to the EU market for UK lawyers looming, a lot of clients and corporations will move outside of the UK. This in turn will significantly affect the UK economy given the reduction in corporation taxes coming in.

So, how can law firms ensure they stay a step ahead of the consequence of Brexit?

There are two things that law firms must certainly do, the first being associated with their clients and the second being associated with their growth.

Many corporations will be on edge and unsure of their financial future; what they are going to need is their lawyer. The key to success in this situation is all based on the lawyer and client relationship.

Secondly, we look at the recent merger of Eversheds and Sutherland Asbill & Brennan. A merger of law firms comes about for one of two reasons: for financial stability or for growth. In this case, we can speculate that it’s a bit of both but mostly international growth. The merger will allow the firms a larger international client base and offer a greater financial budget for further developments that the firms wish to do.

The UK economy in its current state is steady, but the future as predicted is not so bright. However, the solution is to just keep going: if you stop growing, stop investing and stop being brave you don’t get anywhere. You may well be financially stable for the time being but corporations need to grow, expand and get bigger to compete with rivals; if UK corporations don’t do this they will be overtaken by international corporations leading to further economic problems. If the legal market does not expand and grow then firms will be overtaken, become financially unstable and be dropped by clients. What is the real future of the UK economy? A question for all corporations and lawyers.

Anonymous

Anonymous

Jan 17 2017 11:00am

These comments are pretty unnecessary and reflect what a spiteful, embarrassing bunch City solicitors generally are. Ignore them. They probably didn’t have the balls to write this sort of article, and still don’t.

Anonymous

Anonymous

biff

Jan 17 2017 12:01pm

From now on, before anyone posts on LC, please please, before hitting the ‘comment’ button, ask yourself: ‘Hang on a minute. Am i just being a c*nt here? Maybe i’ll not be a c*nt for once. Maybe i’ll just go and make myself a sandwich ‘.

Anonymous

Jan 17 2017 1:08pm

If people actually did that the comments section would constantly be at zero. Then how will Tom, Katie and Alex line their pockets? They name universities on purpose because it generates hate and that means more clicks on their site. Notice how any bullying and belittling of universities people went to never actually get removed. They love it and probably agree with it. This site is absolutely disgusting.

Justin

Good on you for having the guts to write this. You certainly have a lot more business awareness than I did in my second year at uni.

On the other hand this is quite an unsophisticated article. I imagine you are an ardent remainer, which is fine, but you need to consider the other side of the coin.

A few points:
– The fall in sterling, or any currency, is not necessarily bad. Often it is a very good thing. Countries in difficulty often rely on the devaluation of their currency to boost growth. The main reason there is high unemployment in Greece, Spain and Portugal is that they are tied to the euro. These countries would die for some.devaluation.

– There is no imminent risk of a UK recession. The ludicrous pre-referendum warnings have been completely proved false. Even the IMF, which has lots of vested interests, predicts growth of over 1% until 2018, ans yesterday upgraded its forecasts for 2016 and 2017.

– ‘The fear of a worldwide recession is something which is very unlikely to happen.’ This sentence doesn’t make sense.

– Don’t use ‘impact’ as a verb. Admittedly a personal bugbear but it is pure business jargon and sounds naff. Only whip it out in interview with partners with gelled hair.

Anonymous

Jan 17 2017 12:03pm

On the devaluation point – a reason Germany does so well in the Euro is because the currency is artificially devalued within Germany by sharing it with less successful economies. That gives them great clout internationally as it is cheaper to invest in German companies. Devaluing the pound artificially (but by different means – a fear of economic downturn) puts the UK at a more level playing field with regards to such aspects.

Anonymous

Trainee

Jan 17 2017 11:56am

After the economic downturn in 2008, and the fewer training contracts available 2008-2010, lots of law firms had to recruit laterally in the years following 2010 in order to keep up with demand. I am not sure law firms will be so keen to go through that process again and I have heard from my firm at least that they have no plan to restrict trainee numbers as the economy (if it even does turn for the worst, which is by no means certain as this article seems to suggest) will grow again and lawyers will be needed.

Trainee

Anonymous

Jan 17 2017 1:04pm

Oh look shaming him because he went to keele. For fuck sake can people on here get their heads out of their fucking asses and just comment on the article itself rather than ALWAYS personally attacking everyone because of what university they went to?

Anonymous

TheAcresofFour

Jan 17 2017 7:51pm

Well, this isn’t a dreadful article; It certainly should have had more criticism of City firms in it, particular as you are a Keele graduate, and they discriminate against you based on where you went to university.

Good luck with the TC search, but in the meantime, I have a few criticisms of specific parts of this article:

1. A reduction in company spending leads to a reduction in growth and significant inflation. This in itself will have a significant effect on the UK’s economy.
– A reduction in spending does not lead to significant inflation. A reduction in demand whilst supply remains the same leads to a reduction in prices/inflation. The drop in sterling is what has driven inflation to 1.6% at the moment.

2. The value of the pound since the UK’s decision to leave has been catastrophic, with its value reaching lows last year that were not expected. Businesses are now having to rely on the change in currency rates to predict their long term international and national trade values.
– The use of the word “catastrophic” is pretty emotional for a 20% drop in sterling, which similarly occurred during the financial crisis: I take it you do remember when the £ was 1:01 against the euro? As to the latter part of the sentence, no businesses are not doing that at all. Most businesses of a decent size that are highly susceptible to foreign currency fluctuations hedge against currency movements in order to guard against sharp adjustments.

3. It will be vulnerable to collapse due to its financial instability as global superpowers begin to leave.
– No country in the European Union is a superpower. There are only two superpowers on the planet today, the US and China.

4. The legal market is likely to be impacted dramatically because of work available to firms
– The market in legal services is likely to be affected by the Brexit process, however I don’t think it will be “dramatic”. Expect a 10-20% downturn in M&A activity notwithstanding the depreciation in sterling; Otherwise I don’t think business have really changed their day-to-day plans at all. Longer term strategic investments they might have made which would have led to greater growth may be put off, but these don’t actually figure into current demand for legal services. So really what we are going to have is a period of stagnation for 1 or 2 years.

Keep going James, you probably can get a good TC in a regional firm, just don’t reveal you supported remain (particularly if it’s a northern firm). You won’t be revealing it in 5 years time when the UK is doing just fine in any event.